RAOUL PAL: Lyn, Welcome back to Real Vision.
This is the time you and I have actually sat down to chat so I'm really looking forward to it.
LYN ALDEN: Yeah, nice to have me. It's great to meet you. RAOUL PAL: Can you give people a bit
of background about yourself, just so those who aren't familiar with you know a bit more about
you? LYN ALDEN: Yeah, sure. My background blends engineering and finance. So I've been investing
since I was very young, but my career path started out in engineering. And then I gradually
shifted more towards engineering management, and managing the finances of an engineering facility
while shifting more and more into applying that kind of quantitative background to finance
investing. So that's how I approach things, in a pretty quantitative way. RAOUL PAL: And so
what do you do now, exactly? LYN ALDEN: So I run lynlden.com, which is a research firm. So I have
a free newsletter, and then I have a paid service that-- it has a blend of high net worth retail
investors, like retirees, and then all they way up to the professional investors. So kind of
a lot of it takes some of the complex macro topics that might be more covered in institutional
research and then distills them for a broader audience. That's the main focus. RAOUL PAL: So
did you get into macro to start with? Where, out of engineering, which is a detaildisciplined
process, into macro, which is a broader process? Why did that happen? LYN ALDEN: It was a gradual
transition, because-- so I actually started more in individual stock analysis. And I still do that,
because I feel like the bottom-up analysis and the top-down analysis, they help inform each other.
So sometimes, the bottom-level analysis can inform my view of the top as well. But I started out
in the individual stocks. But over the years, I've realized that we're in a very macro-heavy
environment. I refer to it as the end of a long-term debt cycle, or Fourth Turning. You can
call it different ways-- a large transition. And so I realized that the individual stock analysis
is only capturing a part of the picture, and that I really have to look at macro and to move assets
around big you recessions and things like that and get the general directions of asset classes right.
RAOUL PAL: So when you made that transition, you have to come up with a macro framework, where
did your framework come from? What was the genesis of it? And then, how did it develop over time?
LYN ALDEN: So a lot of it, actually, in my view, comes from control engineering. So my engineering
discipline is mostly controls analysis. So it's like managing a system that has hundreds of inputs
and outputs, and figuring out the relationships, and making sure for every action, there's
an opposite reaction. So if you think of, say, a thermostat as a simple control system,
if the temperature goes up, it kicks in, and it reduces the temperature. So a control system
is like that, but there are hundreds of variables instead of just one or two. And so I realize,
essentially, that macro is one big input-output machine, essentially. And there's all these
reactions that can happen to it. And then, there's policy responses that push things back down and
have, then, ripple effects downstream. So a lot of it is, essentially, looking at things from a
control systems framework into macro and using some of the same kind of quantitative background
to apply it in that space. RAOUL PAL: So when I approach macro, I approach it in terms of secular
cycles and the business cycle. How do you approach it, in terms of what is your basic framework
of how you look at it? LYN ALDEN: A similar way. So I monitor a lot of economic indicators
and rate-of-change terms to see how things are changing before we get into an actual contraction,
in some ways, or before we get to an expansion. So that's the business cycle analysis. And then, I
use lot of historical data research to figure out, what are the major turning points where something
can act a lot differently than a normal business cycle. And so for example, in this environment,
I've been in this weird phase for the past couple of years because I've been bearish from
a business cycle perspective. Thinking-- PETER COOPER: Sorry for interrupting your video,
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can afford to be without it. LYN ALDEN: normal business cycle. And so
for example, in this environment, I've been in this weird phase for the past
couple of years because I've been bearish from a business cycle perspective. Thinking we're
late in a business cycle, things are expensive, but also still being somewhat more bullish than
I would otherwise be on equity and risk assets, which played out pretty well so far because I
expected such a large fiscal response this time. And that was informed by a lot of the longer-term
stuff, seeing how close we are to the zero bound, how the Fed's going to be somewhat limited,
and that it's really going to be a more fiscal environment. And long-term debt cycles often get
resolved just partially with very large fiscal responses and some degree of currency devaluation.
So I've been using that as my framework to augment how I think this cycle can play out compared to,
say, the past two cycles or so. RAOUL PAL: So obviously, I look at the same things. And
one of the things that puzzles me is, why do the actions of the Fed affect the US asset
markets while the actions of the ECB, the SNB, the BOE, and the BOJ don't really affect their asset
markets in the same way in terms of risk appetite? Why do you think that mechanism is? Because it's
weird, right? Because the ECB can do as much as they want, but it won't drive the Euro stocks
up and down. LYN ALDEN: Yeah. RAOUL PAL: But is it just a reaction function, or a behavioral
function, or Pavlovian, or what? LYN ALDEN: I think it could be behavioral. I think there's a
couple [INAUDIBLE]. If you separate out the top five or six stocks from the US equity market and
just look at how the other 490- something stocks behave, they look, in some ways, more like the
euro stock index, right? So they've been flat-ish for the past decade or so, whereas the top five,
six, seven, stocks have really lifted the whole index. So if you separate those super companies
out, there's less of a difference in some ways. And then, also, a general thing I've just observed
is that global real estate, in many places, is even more expensive than US real estate.
A lot of foreign investors focus more heavily on real estate. And the US has just always
had these really big, deep capital markets, and there's more of a global emphasis on the US
equity market. And so I think our relationship between real estate and equity is a little bit
more equity-focused than a lot of other places. That's kind of-- RAOUL PAL: Yeah, there used to
be a lovely thing people used to talk about, and it made total sense my whole career. People just
said, listen, concentrate on one thing. The Fed run the monetary system for the equity market,
and the Bundesbank running for the bond market. And when you understood that, that was just a
great trade. Well, sorry, everybody. I don't know what's happening . This is why the US needs
an infrastructure bill at some point, [LAUGHS] because you're in New Jersey, and I've got better
internet here in Little Cayman than you've got. It's quite bizarre. So we were talking about how
the Fed run monetary policy for the equity market in the US and the Bundesbank ran it for the
bond market. And that's always been a truism. They just look at things in different
ways. LYN ALDEN: Yeah RAOUL PAL: So I just find it interesting that,
therefore, if it's a behavioral function, is it robust? Or is that a fragile assumption that
gets tested? LYN ALDEN: I think it's very fragile. I think this big equity run was, in some ways,
expected, but, for example, it went further than I would have guessed a few months ago. So
my base case for a while is that that large bottom was a pretty resilient bottom, and that we
probably weren't going to see that for a while. But I didn't really expect to reach
all-time highs back in the S&P 500 here in August. So it came up a lot faster than
I would have thought. I would have expected more chop and, maybe, more sideways consolidation for
a while, even if we didn't see that lower low. So I think it's potentially quite fragile, and
there can always be just a few quarters of just worse economic data than people think, and this
whole-- everything the Fed's doing could just be unwound to some extent. And I think one of my
base cases is the Fed's mostly, now, out of ammo by itself. And it's more about fiscal at this
point. So whether or not we get fiscal, and how much and, what kind of areas it's in affects my
view of macro more than anything the Fed does now. And the Fed's job will be to monetize some
of that fiscal, but it's really more about the fiscal things, because the Fed can't do
almost anything about the solvency issues, whereas the fiscal spending can do
some things about the solvency issues. And I think that's going to be the bigger role
going forward, is fiscal. RAOUL PAL: Yeah, so as you know, my base case is that we're going
to get into a solvency problem, because GDP growth is probably going to stay negative for a longer
period of time than people expect. And solvency builds on itself. It creates more job losses,
slower growth. What's your view on the solvency situation going forwards? LYN ALDEN: Yeah,
similar. I had piece a few months ago called, "First Liquidity, and Then Solvency." RAOUL
PAL: That's exactly right, that. LYN ALDEN: Yeah. Yeah, the liquidity thing was back in
March and April, and then we got that out of the way. And I think that's pretty under control
now. I think the Fed is kind of vigilant. So would you see a pretty fast response time,
but there should be a more liquidity shocks. But solvency still has a lot to play out. I mean,
we've seen a lot of the job losses turn permanent, and I think that's probably going to continue. I
think there's we've seen the kind of the service sector shut off and then start to re-balance. We
had that rebound in some areas. But I still think we have a normal credit cycle play out, and
probably more than normal because it's bigger than normal. So I still think we have the more
white collar job losses, or the more professional job losses that they were not, necessarily,
directly tied to service sector pandemic stuff. So I still think this has a long way to go, and
there's not much the Fed can do about that. So it comes down to how much the fiscal authorities want
to let that solvency event play out, or how much they try to intervene. RAOUL PAL: But the question
is, because of-- as I think you alluded to in the beginning-- the size of the debt cycle here, sure,
the Fed is backstopping corporate bonds. I mean, it's crazy. They're buying Microsoft bonds and
stuff like that. But there's the whole middle rump of all of this that is an issue, because
there's debt, there's lower revenue streams, and so what you've got is a potentially insolvency.
And insolvencies tend to go slowly and then pick up over time. LYN ALDEN: Yeah. RAOUL PAL: I don't
know what size government response can deal with that. They can deal with it for short periods,
but how do you backstop a system for six months, or nine months, or a year? LYN ALDEN: I think they
do it in bursts. And I think that we're going to have these bottlenecks where, for a while, they
don't do it, and then, some of the market signals or some of the civil unrest are signals that
force them to do another round. So for example, back in March, we got this roughly $3 trillion
in stimulus. So we have a weird case if you look at all the economic indicators. GDP is down,
employment is down, exports and imports are down, industrial production is down, Construction is OK,
and then retail sales are up at all-time highs. And that's because personal income is actually
back-- it's higher than it was when the year started because people that didn't lose their
jobs got those stimulus checks, and the people that lost their jobs, a good percentage of them
actually made more money with all the offsets, all the extra unemployment benefits. But that all came
to an end at the end of July. So now we're off this fiscal cliff, and the market's still kind of
going up like Wile E. Coyote. So I think the big question the next couple of months-- RAOUL PAL:
Wile E. Coyote market. I like it. LYN ALDEN: Yeah. So yeah, the big question is whether or not we get
this big fiscal thing that they're talking about, or if that gets gridlocked for months. And so my
base case is that because it's an election year, they're likely to pass something and kick the can
down the road for another few months at a time. But in this market, it's really hard
to look more than a few months ahead, because it really all comes down to the next
round of fiscal. And I view it as bouncing back and forth either they're doing fiscal, and
markets are reacting OK, and we get, probably, more currency weakness, on one hand,
or, when they pull back with the fiscal, we can see a slowdown in some of those indicators.
But then, I think it's like how, for example, Powell, back in 2018, was on autopilot with
tightening until the market crashed in Q4, and it made him change his tune. I think that's
how fiscal can play out, where as long as the stock market is doing well and there's not a
lot of stress, policymakers will delay things. But then, when you have market sell-offs, or you
have a rise in civil unrest, it spurs them into action again. I think we could see this dynamic go
back and forth for a little while. RAOUL PAL: And that was much the same with QE 1, 2, 3. The
Fed would do QE, step back. The markets would unsettle. The economy would unsettle. They'd come
back again. LYN ALDEN: Yeah, I think we're going to see a similar thing, except with fiscal more
so than Fed action. RAOUL PAL: So one of things I've been thinking about fiscal, I mean, I
certainly agree with you. But at some point, there's chances of something much larger coming.
LYN ALDEN: Yeah. RAOUL PAL: Because if, let's say, we have a couple of shots of fiscal, and it just
inflates for a bit, falls again, Japan-style, then there's a chance that they're going to
say, fine, we're going to do a 5 trillion, x trillion, New Deal-style spend. And it'll be
different depending on whether it's on the left or the right. LYN ALDEN: Yeah. RAOUL PAL:
And that's, I think, closer to the endgame, when they start to do something absolutely
enormous. What are your thoughts on how this kind of fiscal evolves? LYN ALDEN: I agree
completely. I think that's why my longer-term view is a more reflationary environment and a
trend shift from this past four decades of disinflation to a more inflationary
environment. And I think that's because, if you look at their incentive structure,
the main limiter on how much fiscal they do, while using yield curve control and other
tools to keep yields low, the eventual risk to that is inflation, and unmistakable
consumer price inflation. RAOUL PAL: Well, where do you get that from? That's what I don't--
I understand that there is a probability of it, but in a slower growth environment, with an
aging population, I don't know how to generate inflation, because we've never seen
it elsewhere, either. LYN ALDEN: Yeah, so just going back to that point, I think their
incentive structure is essentially that basically, as long as there's no inflation, then
the big question anyone can ask is, why not print more money? Because if they print
$3 trillion, and all it does is good things, as far as people can tell-- if people, small
businesses were going to go out of business, and then they a PPP loan that gets forgiven, or people
got 600 extra a week, they got more money from not working than working, or just as much. People
got stimulus checks in addition to their normal working. And so they think, OK, why not do it
again? If there's no downside to printing money, why not print more? And of course, as long as they
print money and there's no outright inflation, it seems like there's no consequence. And
if you look back in the previous crisis, the consequence to that money printing was an increase
in wealth inequality over time. It didn't really affect the root issue. But that's because it
wasn't really fiscally driven. It was just central bank recapitalizing banks, propping up the wealth
effect, whereas this is more directed to economy stimulus that gets mostly monetized. And so with
that, when they do it, it feels really good. And literally the only limiter at that point is
inflation. So as long as they don't see inflation, it's really hard for them to say, OK, we did
all that. There is no consequences. But we're going to stop now. So I think we're in that
environment, where when we see weaker growth, the question becomes louder, why not do more? And
then they do more, and then they say, OK, that's enough, and they pull back. And then we see a more
disinflationary environment again, and people say, why not do more? And I think that repeats until
they get the genie out of the bottle a little bit. That's my base case. RAOUL PAL: Yeah, I'm still
not sure that that inflation genie comes out. The market's expectation of an
inflation genie might come out. And maybe you're right, but I've just noticed
in the past, going through 2001, 2008, fiscal stimulus didn't generate anything longer than two
quarters of some sort of growth. And it didn't really-- people don't think of it as a perpetual
state, and therefore, earnings expectations, et cetera, don't rise. LYN ALDEN: Yeah. RAOUL PAL:
And consumer behavior doesn't change because they think of it as an emergency measure. Therefore,
they hold the capital as opposed to spending it. And we saw that a lot in Japan. They just couldn't
get fiscal to really-- you they built tons of new stuff; didn't really work. So I'm not sure that
that plays out, but the fiscal is going to be a big deal. What do you see in terms of-- OK, by the
election, there's going to be two very different fiscal stimuluses if it's the Republicans
or the Democrats. Talk us through the two different scenarios that you're thinking through.
LYN ALDEN: Yeah, so it's interesting. Because a lot of people's big question is who wins, whereas
my question is more about how decisively whoever wins wins. Because let's say you get a Biden
victory, but the Senate is still red, right? Then, I think we're in a situation that looks a lot like
the Obama presidency, the last six years of it, where you had that gridlock between what Obama
wanted to do and what the Senate wanted to do. And so if you get, say, a blue sweep, I think
we're going to, obviously, be in a very spendy environment. If you get a pretty strong red
hold, I think we could still see a pretty strong spending environment, because Trump's going
to want to spend. And if the House stays blue, they're still going to want to spend. And there's
going to be some disagreement there between what they spend on, like we're seeing right now.
Whereas, if you get that more gridlock scenario, I think that's when you get a longer period until
they do more spending. And I think you could have more of a disinflationary environment, or at least
an elevated risk of that happening. So for me, there's definitely different flavors that
the spending will take depending on who wins, but my biggest question right now is how
decisive, and how gridlocked the result is versus, if there's a sweep. RAOUL PAL: Yeah, and
it's interesting, because you can actually see markets pricing in some of this, because
there's also other things that we can tell, is most likely, a Democrat victory would
see more regulation of oil companies, more regulation of tech companies, and a few
other key areas. And some of that's being priced in. It seems to be coming a little bit out now
as, maybe, the spread between Biden and Trump diminishes. What will be the winners in sector
terms on a Trump victory, for you? LYN ALDEN: I think that could be stronger for the equity
market than a Biden victory, just because I think if a Biden victory happens, you could see
pricing in of higher corporate taxes in general. I think you're right about the tech regulation.
I don't see a very strong sector difference, necessarily, between who wins. It's more about the
overall magnitude. A chart that I've been showing is that if you look at effective corporate
tax rates-- so not just the headline rate, but the actual-- a couple of different ways to
calculate it, but the effective payment rate, that's been steadily declining for decades.
And so even when there's not a headline change, there's still other changes that keep pushing that
rate down. And I think that number, the effective version of it, is somewhere around the 10% range
for the federal side. And so I think we're getting to a lower bound, probably, for corporate tax
rates. And so very long secular bull market we've had has been in an environment of perpetually
lower and lower effective corporate tax rates, and I think that that could either flatline, in
some cases, or it could reverse, and we could get higher effective corporate tax rates. And
I think that's something that could pressure equity markets throughout the 2020s decade . And
of course, the odds for that increase if you get a Biden victory. RAOUL PAL: So we're now getting
closer to approaching this election period and the period of no stimulus. Does that make you
more nervous on the equity market? Do you want to hedge the downside, or do you want to
trade the downside? How are you thinking of the equity market in this particular moment? LYN
ALDEN: Yeah, so I de-risked a little bit in June, and I've been holding that steady. And I have been
contemplating de-risking a little bit further now because this fiscal gridlock is currently in
place. And I think, as I'm saying, because my outlook is pretty fiscal-heavy, the big
question is if we get these fiscal hold-ups, I do think we risk more and more seeing pullbacks
in some risk assets. And we've been seeing really bad breadth in the market. So it's only a handful
of winners that have really driven this market up. And I think that's at risk of setting up some
downside if there's not more fiscal. So for me, it's less about, say, virus headlines or about
these onetime things and more about whether or not they throw another trillion or two at things, or
if that gets delayed. RAOUL PAL: And what would be something that would make you think there's more
risk? Because what you're saying is, things could fall. It goes back up again. Things could fall as
new fiscal. What could change that or make it a more risk environment? Because if not, it's pretty
benign. It's just more volatile. LYN ALDEN: Yeah. Well, I think risk of increased taxation is
definitely something that could pressure equities pretty heavily. I think, obviously, an increase in
the China-US tensions could add a lot of downside volatility. And my base case for equity markets
over the whole 2020s decade is to be pretty poor, especially in real terms, let alone nominal,
depending on what inflation, depending on who ends up being right about the level of inflation
we get throughout the whole decade. But at least, I think, the safe answer is, in real terms, I
expect pretty poor equity performance. And so whether or not we get a really bearish outcome,
I think, is up in the air. But I think the upside is not great, even long-term. RAOUL PAL: So
then, OK, so the equity market-- and I agree it's not a great trade. For a longer term, the
time horizon doesn't seem that it's a particularly good trade. LYN ALDEN: Yeah. RAOUL PAL: What about
a bond market? Sounds like you're going to be more negative. My view is bond yields probably have
another stab lower, and then the trade's over. But I doubt we get bond yields rising because
either the Fed stop it or the disinflationary trend stays. What's your view on bonds? LYN
ALDEN: I agree. My base case is that even if they were to rise, the Fed will cap yields.
So that's been a big piece my work lately. And they've already been openly talking about,
potentially, doing that. So it's all on the table, out for everyone to see. So we had the big March
spike. So we had bond yields go down tremendously. Your trade worked out very well. So and from that
low level, during that really illiquid portion, we had the whole Treasury market become illiquid.
Yield spiked very briefly. The Fed came in with a liquidity hammer and took a trillion dollars
of Treasuries off the market in three weeks and hammered that spike back down. Then,
we've been in this sideways period. We had a little bit of a Treasury spike in June, but the
market just brought that rate down by itself. And lately, in the past couple week or so, we've
been in this rising-- we had another yield spike here. It seems to be back on a downtrend, but it's
unclear at the moment. So my case is, essentially, that there's not a lot of range for bonds. Because
sure, we could have another deflationary shock. We could have one of those risk-off events that
I talked about potentially spurring them to do more fiscal. So we could have, say, a lower
low in bonds. We hit the zero bound, perhaps. There's not a ton of room there. And if they
go up-- which I think they might try to do when we get a more inflationary environment--
if that outcome works out, I do think they cap it. RAOUL PAL: But that's more likely 2021 that
it is 2020. LYN ALDEN: Yeah, yeah. And so I think it's possible they could lay the groundwork for
yield curve control later, because it's a way to give forward guidance. But I don't think they're
going to have to do hard yield curve control in 2020, because this is still playing out. So I
think the bond trade is pretty weak at this point. And one of the big things I'm watching, which
is curious-- I'm actually curious to hear your thoughts on this, too-- is that we've had a
divergence between break-evens and nominals. So if you look back over the past 15-plus years
of data, there's only ever been one period where we had break-evens trade so far above nominals,
and that was in about a year from 2012 to 2013. So if you look at this period, nominal yields
came down, and they've stayed low in this range. Whereas break-evens, after they hit that March
low, they popped right back up. So the Treasury's pricing in higher inflation-- or at least
a rebound in inflation; not, necessarily, higher inflation, but a rebound in inflation-- and
yet they're still keeping nominals low. So that's one of the things I've been watching, which has
been very interesting. I'm not sure if you have thoughts on that. RAOUL PAL: Well, it depends who
the [? buyer ?] is. So we saw this in the UK 20 years ago, and it was the pension system. Because
the pension system had long-term liabilities, they were forcing apart the relationship between
break-even and nominals in hedging that out. So I don't know whether it just flows-driven as opposed
to a signaling. So in the UK, the signaling became useless in the end. So I think the signaling for
inflation ended up being better in the nominals than it did in the break-evens because with
flow into break-evens-- which are, obviously, less liquid-- you tend to-- if the whole
pension system decides that we're going to an inflationary move environment over the next
10 years, and with the pension liabilities that they've got, they probably need to [INAUDIBLE]
by break-evens, regardless of whether inflation goes up or not. They need that hedge, because if
not, they're super bankrupt. They're bankrupt now, and then they're super bankrupt later. So it's
possibly that. Don't really know. And so the other thing I'm thinking about, so OK, we've
gone through equities, which don't look like great forward expected returns. You're keeping
onto some risk for the time being because fiscal could keep it OK. Bonds, yeah, they could probably
drift lower in yields. but no great trade there. Credit, I feel-- we both think this is a solvency
event in the making. I watch the price every day of AT&T, and General Electric, and all these
BBBs. And the equities go down, but the credit is never going to go down because of the Fed LYN
ALDEN: Yeah. RAOUL PAL: I mean, have we lost the credit market, now, as well? We're going to lose
the bond market at zero bound, we lose the credit market because of the Fed-- LYN ALDEN: I think
so. I don't know if you saw the news the other day. The New York Metro was selling bonds to raise
some capital, and banks gave them a bunch of bids. And the market priced it, and they turned around
and said, no, we don't like any of those yields. So they sold it to the Fed for a lower yield. So
that was one of the more blatant cases of just, the market had a price, and they had price
discovery, and then the Fed's just like, we don't like that number. So in some ways,
we're seeing yield curve control in these riskier markets. Not yet in the Treasury market. RAOUL
PAL: I mean, the ECB had done that for almost a decade now. LYN ALDEN: Yeah. Yeah, and then
they use those negative yields to go buy out other companies. And it creates all sorts of weird
behavior in the market. So yeah, I think that most of that market is not correctly pricing
in risk to some extent because the Fed is handicapping it. RAOUL PAL: So my view on that
is it's not going to, because the Fed are not going to allow it to happen, because it blows
up the pension system if it does happen. So the equity market probably has to price in that
credit risk. And we've seen that now. The banks have massively underperformed the indices, and
the BBB sector has massively underperformed in equity terms. So I think it may be the equity
market prices that it. LYN ALDEN: Yeah, I think it's possible. And that's why I still
use some individual stock selection to augment my risk exposure, rather than rely on indices. So
I can identify companies that I think have longer positive-term outlooks, that have the strongest
balance sheets, at least in their industry-- either in absolute terms, or strongest in the
industry. And so that's one way to minimize risk, if people are willing to go down to the individual
stock level. Whereas, just from a broad indices level, it's really challenging. RAOUL PAL:
So moving on to asset classes now. We know your view on the dollar. So we've seen that,
and the dollar's relatively weak. But where is the opportunity going forwards? Because we've
identified the three main other asset classes, probably going nowhere. So where do you see the
opportunities? LYN ALDEN: I see a couple. So to get some out of the way, I think emerging markets
have some opportunities throughout the 2020s. I think it really depends on the market. So instead
of just being one market, it's a collection of so many different markets. Like Russia, and
India, and Turkey couldn't be more different. So I analyze each country differently. So I have a
report that goes over 30 different countries and just sees what the macro situation is doing. So
I do think there are some opportunities in some of these equity markets that have not done well
in the past decade that are trading at pretty reasonable valuations and that-- some of the ones
that have stronger fundamentals-- like, say, less dollar-denominated debt as a percentage of GDP,
that sort of thing. So I think we could see some opportunity there. I think after international
diversification is mostly worse in returns over past decade, I think it could increase returns
over the next decade. RAOUL PAL: Yeah, the emerging markets have massively underperformed.
This is the second largest underperformance in all history. LYN ALDEN: Yeah. RAOUL PAL:
So at some point over the next 10 years, once the dollar fully turns, whatever that is,
it seems like it's a bit of a no-brainer-- as long as you can get rid of the debts issues
that are still out there. LYN ALDEN: Yeah, I think so. And if you look at the big period
of underperformance, it made sense, because back in 2007, emerging markets got extraordinarily
expensive. India's CAPE ratio was the same as like the US in the dot com bubble. You hit almost
dot com bubble-like valuations in China, India, to some extent Brazil. So that's worked itself
out. Equity valuations have come down, even though there's still been an increase in some earnings
and GDP growth in those areas. So now we're at healthier valuation levels. So if you do get more
of a turn, there's more of a base to work up from, compared to working up from a very high valuation.
So I think it's pretty rare for an equity market to do well in one decade and still do well in the
next decade. So the US has dominated this decade, and now I think we've squeezed a lot of juice
out of that orange, and I think that at least some of the stronger emerging markets have
decent opportunities over the 2020s. I am somewhat bullish on copper. I think you see it
the other way, but so copper-- RAOUL PAL: Well, I had a trade on. I actually stopped that the
other day because I got bored of the trade. Because at the time, I was thinking of copper in
the-- I think I put it on during the liquidity phase, and it was the only short commodity
position I had on, because I'm relatively bearish over time industrial commodities, because
I could get more disinflation to come before we might see a shift. So other than that, I didn't
have a massive view on copper. LYN ALDEN: Yeah, so some of those base commodities, if we get the
more reflationary outcome, I'd be pretty bullish on those. We're at a pretty big divergence between
commodities underperformance compared to equities, so I do think we could see somewhat of a rebound
there in time for looking over multiple years. And then, besides those, those are more of my
risk areas, the emerging markets and the base commodities. And then, precious metals have been
one of my key trades since 2018, both the gold, silver, and the gold miners-- and some of the
silver miners as well. So that's been a useful trade so far. It's getting a little bit harder
now, because we have come pretty far, and now the real rates has mostly played out. So now it's
highly dependent on getting a reflationary outcome and having yield curve control to keep real
rates low. So I think that-- RAOUL PAL: I'm not convinced about the real rates thing.
And let me talk you through my thought process, because then [? I can ?] align with yours.
And I think the market just says real rates low, gold up, right? LYN ALDEN: Yeah. RAOUL PAL:
But from what I can tell, we're going to get deflation, headline deflation, for a period
of time, just mathematically. And real rates will likely rise. I think they go,
really, quite positive, a bit more positive than people expect. And people
say, well, that would be negative gold. But then think about it. And think,
OK, so you're the Federal Reserve, and you see real rates rise sharply because
inflation is lower than people expected. Their reaction function is just to do more. LYN
ALDEN: Yeah, exactly. RAOUL PAL: So therefore, gold goes up. It seems it's only
corrective, as opposed to a trend change, if real rates change. LYN ALDEN: Yeah, that's how
I view it. And this last correction we've had, gold and silver came very far very fast. And then
we did see that bottom form in the real rates. We saw an increase in real rates. And this time, it
happened to be because nominals rose faster than CPI rose, so it was the opposite direction.
But we saw that pressure on precious metals, but it seems to have been corrected. Because the
long-term fundamentals still support precious metals to some extent, because if we're not going
to get rates out of bonds-- So you've looked back in history there is a pretty strong relationship
between real rates and yearover-year changes in gold prices. It's not perfect, of course. There's
other factors that influence it. And so in those environments where you can get a strong positive
real yield on bank accounts or treasuries, there's a big opportunity costs for holding
gold. Whereas, in this current environment, there's no real yield happening in the
whole Treasury space or in bank accounts, and so it makes the opportunity cost
for holding gold much lower. Plus, we're seeing other countries around the world,
central banks, have been shifting more of their assets a little bit into gold over time, because
they take away that counterparty risk. They take away the sanction risk. They de-dollarize a little
bit. We've seen more out of things like Russia, and Kazakhstan, and to some extent, China. So I
do think that gold still has pretty strong legs, even if real rates are choppy for a while. I think
you phrased it correctly, they're more corrective rather than major trend changes. Because as soon
as you see that, you see more money printing and more stimulus. RAOUL PAL: So how do you see silver
versus gold? Because they're not the same thing. How do you see the difference, and why are you
favoring silver? I'm long silver as well, but I'm just interested in your view. LYN ALDEN: Yeah,
so now, I'm more mixed. So I was, for a while, gold was outperforming. It tends to do better than
silver in these more disinflationary environments. So real yields were falling since 2018, but it
was it was not because CPI was rising. It was the opposite. It was because nominals and CPI
were coming down, and nominals were coming down faster. So gold tends to do well in that
sort of risk-off, disinflationary environment, whereas silver tends to do better in a more
reflationary environment. So that's what we've seen so far, where we had gold outperform
until the March crash, and then we've had silver come up strong since then. Now, because the
gold-silver ratio has normalized a little bit, I think that trade is harder now. Because when
silver was extraordinarily cheap relative to gold, and then we had this trend shift towards
reflation, I think silver was easy, for anyone who's patient and can handle the volatility--
isn't leveraged to it or something like that. Whereas now, I'm more mixed. Now we've had some of
that normalization. So now I don't have a strong opinion between the two, and I like to have both
for diversification, because they can move on somewhat different forces. RAOUL PAL: And if there
is more volatility around fiscal stimulus stuff, like that-- so i.e. reflation on, reflation
off, reflation on, reflation off, it's likely that silver is more volatile, then. I mean, it's
more volatile anyway, but it feels like gold, probably, is better anchored. LYN ALDEN: Yeah,
and I think it can make for good rebalancing, to extract gains out of that choppiness, or
more active trading around that choppiness, selling overbought conditions and buying oversold
conditions. So yeah, I think we could-- I think both of them have pretty good prospects throughout
the decade. So I think they still have a somewhat upward bias. But I think you can get a lot of
money trading around that bias. RAOUL PAL: And you like gold miners as well? LYN ALDEN: Yeah.
Yeah, again, they've come pretty far pretty fast. So I still like them. I like them less than
I liked them in 2018. But still, compared to, say, the S&P 500, I still like having a segment of gold
miners in my portfolio. Not a big one, because like silver, the volatility is pretty high. So I
manage that position sizing. But yes, I'm still fairly bullish on precious metal miners.
RAOUL PAL: So what are you really bullish on? LYN ALDEN: Well, for the next year or so,
probably Bitcoin. RAOUL PAL: I knew it. i was waiting for that, because-- LYN ALDEN: Yeah,
well, because in the past couple of years, my highest conviction view was the precious
metals, and I had no position in Bitcoin. And I analyzed it in 2017, and it didn't have a
position, and I was skeptical about some things about it. So I wasn't strongly bearish, but I just
wasn't-- I was leaning bearish a little bit. But in April this year, I turned bullish. And then,
just in May and June, that just got even stronger, just bullish conviction. Basically, where we are
in the halving cycle, and how uncorrelated Bitcoin is to other things. If you look at the Bitcoin
log chart and compare it to the halving points, it's clearly operating on its own cycle.
So for me, that's a more isolated trade, where for gold and silver, I have to take into
account that whole kind of fiscal reflation, off-on situation. Whereas Bitcoin, I think,
is going to be-- I think around the margins, things like liquidity and reflation on or
off can affect some of the some of the daily, weekly, monthly action. But I think that the price
difference between now and, say, the end of 2021 is not going to be strongly influenced by other
factors. It's mostly influenced by how much Bitcoin demand there is compared to the reduced
supply. So I think that at least in managing position size, I think that's one of the easiest
asymmetric trades at this current time, where it's not guaranteed, but the upside is so many
more times than the downside. RAOUL PAL: Yeah, and that's how I see it. I mean, just it's
almost-- I can't see any trade that comes close, even volatility-adjustment, right now for
this period ahead. As you said the year, 18 months ahead, it just feels like it's the
superior trade. Gold has had that run. Bitcoin consolidated for a long period of time. We have
the halving. It And we've had a lot of regulatory changes in the US that allows banks to custody it,
which means, basically, that's a code word for, we can prime broker Bitcoin for hedge funds. LYN
ALDEN: Yeah, and we've seen the institutional access build-out, right? So it's easier for
institutions to access it now. We've seen Paul Tudor Jones come forward and open the floodgates
a little bit, potentially, for more institutional money. And the ecosystem around Bitcoin just gets
stronger with each halving cycle. So there's more companies making it easier for retail to
access it, and institutionals can access it, like you pointed out, pretty well. And also,
we've seen a rise in Robinhood trading this year, and they can buy Bitcoin right on the app. So
if some of that-- instead of buying bankrupt companies, they can switch over to the cryptos and
have a blast with that. RAOUL PAL: So yeah, and we've seen Davey Day Trader is now become a crypto
guy because-- bizarrely, it's because it's not regulated by the SEC as much so he can basically
pump it up. I don't really know how to think that through, but I can understand that retail
money is going to come back into it, along with institutional. And one of things that I think
about-- and you probably think the same way-- is it's one of the biggest legitimate
front-running opportunities I've ever seen, because you know where the herd has to go,
which is all the institutions. And the movie goes up in price, the bigger the market cap is,
the more they have to do it. LYN ALDEN: Yeah, the more it gets hard to ignore. And so far, from
the halving cycle, that's the general trend, is the supply is cut in half, the new supply is
cut in half. There's still a demand for it, so that starts pushing up price. And then, when
it pushes up price enough, you get the momentum traders in there, and then that pushes that up
even more. And then you get the FOMO traders. And so I think a really asymmetric bet is to say,
OK, we're in the early stage of a halving cycle. It's possible this having cycle doesn't play out
anything like the other ones and it just totally flops. Or, just to say, OK, I have a specific time
frame. I'm willing to risk a specific percentage of my capital to see how this plays out for a year
and 1/2 and just see if that same pattern happens. And because demand is still strong, and because
there are more institutional access points. I don't have a strong case as to why it wouldn't be
a similar price shape as the previous-- RAOUL PAL: Yeah especially reflexive right now. Because we're
all set up for it, we know what's coming, we know that the flow of funds are coming, and we know how
retail is going to react with it. So it's almost a potential self-fulfilling prophecy. As you say,
there's no guarantee here, but it's as good a quality see trade as can see anywhere right now.
LYN ALDEN: Yeah, I think the risk-reward is just very good, especially when someone manages their
position sizing and they have a specific kind of time frame. RAOUL PAL: And do you look
at Ethereum yet, or just mainly Bitcoin? LYN ALDEN: I've looked at a bunch of them, and
my approach is to stick with purely Bitcoin, for this cycle at least, I'm still really bullish
on Bitcoin. I know you've gotten into both. I don't know if you had any updates on Ethereum?
RAOUL PAL: Not really. I mean, Ethereum, for me, is a bet on the system, and Bitcoin is a
bet on the reserve asset itself. LYN ALDEN: Yeah. RAOUL PAL: So it's like gold/silver. I
think Ethereum was underpriced versus Bitcoin, and no stronger view than that. Really,
like you, my core view is Bitcoin, Bitcoin, but I'm just trading around it because I think
there's opportunities in Ethereum, and I'm looking at buying in as it's been correcting the last few
days. And I just think there's no real reason, if retail gets sucked in, that it's not going
to go up further because it's slightly more speculative. Here's something interesting I saw
yesterday on Twitter. I don't know if you saw it. Somebody put the bitcoin dominance over the
Altcoins-- i.e. how much of the total market cap of the entire crypto universe Bitcoin has-- versus
the US dollar. LYN ALDEN: I actually did see that, yeah. Yeah, I haven't dug into it. I'm
wondering if it's a random correlation, or if it's actually somewhat causal, yeah. RAOUL
PAL: I don't know. It struck me, and I looked at it, and it's very similar if you look at the
Ethereum-Bitcoin cross rate against the DXY. And that will be the same, I guess, as the
gold-silver cross rate. So there's some informational value I've not yet processed withing
that. LYN ALDEN: Yeah, I keep trying to find correlations like that. When I was doing research
for Bitcoin, I was always trying to figure out, say, are there certain liquidity indicators that
correlate really well with it? How much of a liquidity play is it? And it really wasn't until
I saw a log chart and the having cycle. That was the clearest unmistakable pattern. RAOUL PAL: What
is so great, as an asset, is it doesn't correlate over longer terms, as you say. So it's hugely
accretive to a portfolio. LYN ALDEN: Yeah, yep. Especially if you pay attention to the halving
cycle, and it just operates on its own beat, pretty much. And there are still brief periods
where correlations go to 1. So for example, its price was definitely influence in March by the
broader macro picture. But that was a blip on the radar, whereas the year-long outcome is mostly
just operating on its own beat. RAOUL PAL: And so you're more bullish on Bitcoin than you are
on precious right now? LYN ALDEN: Yeah, over the next year and 1/2, at least. I think over this
period, we've seen very strong price action in the precious metals. I remain bullish. I just think
the easier part of the trade is finished, and now it's the harder part of the trade, which I'm
willing to stick with. But I've also been hedging the difficulty of that by just having a Bitcoin
position, because I think, ironically, for this specific year and a half, I think it's the easier
trade. RAOUL PAL: Right, I'm going to ask you some questions that we've got from our audience
about a lot of things we've been talking about. So here's a question, again, about Bitcoin, is,
how do you see Bitcoin performing in another risk-off event? LYN ALDEN: I think it could be
like March, where, I think, we could have a blip. I think we could have a down. I'd be a buyer
of that. I think that would be be corrective. So again, in the grand scheme of managing position
size, so not going, maybe, overboard with it, but if we get that kind of pullback, I
would use that as a chance to, probably, accumulate more. I think it has strong correlation
to liquidity in the very near term. So if we have a sharp liquidity issue, I do think you could
see a pullback. But I don't think that changes, say, the price, where the price ends up in late
January 2020, or late 2021. Yeah. RAOUL PAL: It's kind of like gold, as well. Gold has short-term
liquidity issues, because it's quality collateral, right? LYN ALDEN: Exactly, yeah. RAOUL PAL: So
you liquidate your quality collateral to pay for other things. So of course it gets hit,
but it doesn't last long. LYN ALDEN: Yeah, I agree. That's how I view it. RAOUL PAL: When
we're talking about emerging markets, which ones do you favor looking forwards? I mean, right now,
it's probably still a bit of a mix in the emerging markets, and nobody's doing anything specific.
But if you're looking forward to that longer-term time horizon, what are the emerging markets
that you favor or think you favor at this point? LYN ALDEN: Yeah, so I like India, for the
most part. Now, I've actually been surprised at how weak they performed in this period so far.
They're one of the few countries where the COVID cases are still rising very quickly, and some
of their economic data has been weaker than I would have guessed. So that I think that still
takes time to play out, but I'm pretty bullish, say, looking back at the end of the decade, which
equity markets did well, I think India has a good case for doing well. Its valuations, it's always
one of the the more expensive markets, because-- RAOUL PAL: Always, always. LYN ALDEN: Yeah, the
demographics are great. The debt levels are pretty low. They're not one of those countries that have
a ton of dollar-dominated debt. Their currency tends to be weak, because they have to import a
lot of oil, so they burn these consistent trade deficits. But I do think that valuation-wise, even
though it's not cheap, compared to its long-term history, it's not like it wasn't in 2007. It's
not in bubble territory. I think considering the growth, and the demographics, and the balance
sheet, I do think that that's a pretty strong equity market over the long term. On the opposite
end of the spectrum, I actually like Russia. It's slow-growth, but it's super cheap. It's been
cheap for a while, but it's still cheap. And they actually-- so they went into this crisis with a
fiscal surplus, a trade surplus, a very low debt, more reserves than external debt, and they have
the highest, say, gold-to-M2 ratio, pretty much, of any major country. So they have tons of gold.
They just have tons of reserves. A lot of it's gold-based. It's really, obviously, dependent
on oil prices. And so to some extent, I like to combine that with my India trade, because India
prefers lower commodity prices. Russia prefers high commodity prices. And besides those two
factors, I like them both long-term here. So having them both in a portfolio takes out some
of that commodity question to some extent, and which one does better, I think,
will depend a lot on commodity prices. I like some of the Chinese tech stocks. I like
Tencent, for example. Now, China is a black box, to some extent. It's not a trade I like too much.
But especially when you look at, say, an emerging markets ETF, one of the problems is that China
dominates it so. It's like something like 40% China. So that's actually one reason I
like to diversify away from the broad, emerging market ETFs and use some single-country
exposure to, say, get more Russia, more India, things like that. But I do think China at
current valuations, especially for some of their companies that aren't-- China, of course,
has that really large corporate debt problem, but a lot of it's in their real estate sector, so you
don't really see it in companies like Tencent. So I do think selective Chinese exposure,
taking into account that the numbers could be-- RAOUL PAL: Are made up. LYN ALDEN:
Are made up. So I think whatever position you would have, just have less of it. All right, so
the fundamentals look good. Discount it by the fact that, there's a question about how real those
fundamentals are. RAOUL PAL: So you might as well call that the superpower basket-- China, India,
Russia. LYN ALDEN: Yeah. Yeah, superpower basket. I think Latin America's pretty pressured. I have
had some selective stocks down there, but I'm more selective on individual names rather than
indices. I think some of the other countries in Asia-- I mean, South Korea, MSCI still
considers it an emerging market, but they have better internet than I have. So you know--
RAOUL PAL: Yeah, somebody's got to reclassify all that stuff. I mean, Taiwan and South Korea
are not emerging markets. LYN ALDEN: Yeah, oh, FTSE considers South Korea developed. So if you
look at, say, a Vanguard emerging markets index, South Korea is not there, whereas in the
iShares MSCI, you have Korean in there. So yeah, I don't consider it emerging, but if we're going
to call it that, I think it has some promise. So yeah, they're the countries that I'm
favoring. RAOUL PAL: Right, so more questions. So somebody's actually asking, sorry,
clipping bank to the crypto and gold, is how-- so Lyn has mentioned in the past she
thinks about her precious metals investment in terms of liquidity layers, from physical to
ETFs, with physical being the last layer. Does she think about Bitcoin in the same fashion-- cold
storage to the Bitcoin Trust? What price would she exit her respective Bitcoin layers? LYN ALDEN:
Oh, yes. RAOUL PAL: They've followed you very closely. LYN ALDEN: That's a really good question.
Yeah, so yeah, for people that aren't aware, see, I described my precious metals exposures as
layers. So I have physical layer, which I'd be very slow to sell. The only time I ever sold
physical was 2011, and part of that was luck. So I don't really trade that. Whereas then, I
have the miners, some ETFs. I prefer some of the harder ETFs like Sprott Funds and/or Perth
Mint rather than the GLD, but it's still liquid for my purposes. So I'd be quicker to sell some of
those liquid positions. Now, bringing that to the crypto space, I do have a similar approach. So I
have a layer of that in cold storage which I'd be slow to sell. I'm not even sure I would sell it in
this having cycle, for example. Whereas, I have, then, a more liquid layer that I-- my plan is
to taper some of that out if we see price action in this halving cycle that's anywhere near the
previous having cycle. So if we see that pretty sharp rise in 2021, instead of trying to time the
top exactly, I probably would start layering out some of that liquid position. Whereas, the cold
storage position, it has to get pretty crazy for me to dig into that and release that. I think I
could trim it in this cycle. I don't really plan on going to a zero Bitcoin position, so I don't I
don't plan on fully loading that that lower layer. RAOUL PAL: Another question on gold and silver--
well, beyond gold and silver. Specifically, platinum, which has been consolidating for some
time, and copper. We talked a little bit about copper. So your views on those? LYN ALDEN: So
I don't follow the platinum market as closely. I follow it to some extent. I am somewhat bullish
on it. I have a little bit of platinum exposure. But it's just it's a much smaller position
compared to gold and silver, because I have a long history of tracking gold and silver. In some ways,
they were, essentially, my first investments. So I have a very long history of keeping up with those
markets, platinum is more industrial base, and it's almost like I have it as a tail position in
case there's some shortage, or in case we switch back more towards using platinum in some industry.
So for me, it's a slight diversify on my precious metals position rather than a core thesis.
RAOUL PAL: And copper? LYN ALDEN: Yeah, so as we discussed, I'm pretty bullish copper long-term.
There hasn't been a lot of new development. Now, it's very dependent on China's consumption,
because China is responsible for half of copper. So that's the big tail risk, is China's a black
box, so what happens with their copper demand? I do think, going back to India, I do think
India could be a pretty big source of copper demand in the 2020s. They have a much smaller
copper installed base per capita than China. And even China, even despite all its infrastructure,
they have less copper per capita installed than the Western countries. So I do think I'm
pretty bullish on copper for the 2020s, but I think there's risk related,
especially, to China. RAOUL PAL: Yeah, I'm the same with India. It's, look, I'm
half Indian. I spend a lot of time there. And they've got a lot of building to do. LYN
ALDEN: Yeah, yep. RAOUL PAL: I think if anybody's going to drive the next commodity supercycle,
you need a demand side of the equation. It's certainly not going to come out of the West.
Yeah, sure, we might get an infrastructure bill in the US and Europe, but really, it has to be
India. There's nobody else that can move the dial enough to do that. LYN ALDEN: I agree. Yeah, I
view it as-- so I think because of how impactful-- again, bringing it back to the long-term debt
cycle, in addition to this whole COVID-19 hit, I think that in the 2020s, some of these Western
countries are going to turn to more infrastructure to try to prop up their economies. And for
example, the electrical grid in the US needs much bigger upgrades if it's going to support
more electrical vehicles and things like that. So I do think that that can drive some marginal
demand for copper. But yeah, I think India is the saving grace for copper. And then, to some degree,
is other emerging markets. But I think India is the headline there for driving copper. And then,
the other side of it is there's not a ton of new supply at current prices. There's more supply
they could bring online at higher prices, but at current prices, it's not really incentivized to
bring any new supply online. And there's actually been pretty significant exploration costs, and
they're still just not finding a ton of copper. So I think that it's almost an inevitable situation,
but the timing is-- there's multiple years of variance there for how long that trade takes to
play out. So I like having some copper exposure. RAOUL PAL: OK, final question is, what would
cause you to change your mind on precious metals? When would you say, right, I need to
get out; trade's done? LYN ALDEN: I think, essentially, if we get almost a good thing, like
if we get a blow-off top in precious metals. So I was getting a little nervous when it was starting
to go vertical in the past month. Now, we've had some corrective action. I have identified a time
that I would probably sell a lot of my liquid position would be if we get a more reflationary
area trade, they do yield curve control, real yields go more negative, and we get
a blow-off top in precious metals. Then, I'm out of catalysts for the near term for why I
should still hold it, so I probably would reduce my liquid exposure. On the other side, there's not
a ton that would make me want to get out of it, because most of things that would be bearish for
precious metals-- say we get higher real yields, more disinflation, deflation, we could see
consolidations in the precious metals. But I think equities could be worse, right? So between
bonds, equities, I always view it as, what does gold and silver replace in the portfolio?
What would I put in there if not for them? So I don't really see equities where were bonds doing
much better over a multi-year period than them, especially equities. So there's not a ton that
would make me sell it on the bear side. That's my answer, yeah. RAOUL PAL: I've thought this through
myself recently. I thought, in what scenario would I want to get out of gold? And yes, like
you, it goes up, extra speculation, of course. The other one would be 1 and 1/2% to 2% GDP growth and
1 and 1/2% inflation. That kind of low volatility, OK world, it's just not a good world for gold. LYN
ALDEN: Yeah. No, I think-- RAOUL PAL: Yeah, either tail is fantastic. Gold, I think, has a smile
to it, somewhat like the dollar has a smile to it . Gold's got a smile to it, and somewhere in
the middle, in that kind of Goldilocks economy, it's not great for gold. LYN ALDEN: I agree.
Yeah, I think that's an intermediate thing, where I think there could be a year or so in
here where we get years like that that are just gold is just dead for a year. So that's my
concern on the bear side, is not necessarily a big kind of bear cycle for gold, but more just
a bad year here and there at the end, and trying to manage the risk of that happening. RAOUL PAL:
Yeah, essentially, we got it from 2011 to 2018, really. LYN ALDEN: Yeah. RAOUL PAL: And what that
was, in the big picture, it was just a sideways correction. Sure, it was quite a big range. But
really, it was a sideways correction. Gold did its thing because there was less monetary largesse
around, et cetera, and gold just rested. And then, as soon as things pick up again, then gold does
its thing. LYN ALDEN: Yeah, and I have a model that tracks gold prices relative to money supply
growth and interest rates. And so if you look back in 1980 and 2011, it got way ahead of the model,
whereas in this period, it's not really ahead of the model like it was back then. So it would
have to run a little bit further for me to say, I think it's overvalued, I think it's dangerous.
But I do think if we get a more Goldilocks period, I think it won't be-- I would be surprised to
see a big multi-year bear market consolidation. But I do think we could see a smaller year,
two-year kind of slumpy period for gold, because it's just there's nothing driving it
in that year. RAOUL PAL: One thing I do is I've got a basket 27 currencies versus gold. And
that's super interesting, because it does exactly what you'd imagine it should do. It offsets all
the currency weakening of these 27 currencies. We've lost Lyn again. So I think we will
call it a day. Thank Lyn, everybody. And hopefully, if there's any other questions, put it
in the comment section, and I'll get Lyn to weigh in if possible. OK, thanks a lot for tuning
in. NICK CORREA: Thank you for watching this interview. This is just a taste of what we do at
Real Vision. To learn more about the complex world of finance, business, and the global economy,
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